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You know how when you shop on Amazon there is a price and a then a “list price” which is usually much higher?

The effect is that you feel like you’re getting a big discount shopping on Amazon.

It turns out Amazon might be publishing list prices that are too high.

Mouse Print first noticed the problem with an array of general consumer products such as Kraft’s Mac & Cheese and a 100-count box of Splenda.

As if this afternoon, most of these prices have been fixed, except for a ton of pet food items.

Take for example the dog treats you see above. The retail value of one Merrick Flossies is approximately $4, making a 50-count supply valued at no more than $200. Yet Amazon claims the list price stands at a whopping $422.89, more than doubled what it should cost.

We tried to contact Amazon for comments, but did not receive a response.

The incident reminds us of last year when Amazon listed a seemingly normal book about flies for $23,698,655.93. Biologist Michael Eisen blogged about the unrealistic selling price, and documented how Amazon’s price for the book The Making of a Fly constantly went up day after another.

Here’s what happened: A professor required this book for a class and students naturally flocked to Amazon to purchase the text. Eventually, only two sellers still had the product available.

Because the book quickly became an exclusive, hot ticket item, Amazon’s algorithm for retailers to competitively price their product catapulted the retail value to more than $23 million.

We’re not sure if this is the same situation with the pet food offerings on the site, but it seems hard to believe the world is running out of doggie treats.

Deli Cat Dry Cat Food

Ok, we know having pets can be expensive but you can’t fool us, Amazon.

Higgins Celestial Blend Bird Food

Who can resist 89 percent off retail list price? Only ten left in stock!

Redbarn Filled Bone – Peanut Butter

Dog foods are getting so fancy these days, but at $6.70, the bone’s a steal.

There is a common belief that venture capital has become a necessity to get start-ups off the ground.

The seemingly endless flow of funds is very appealing to the up-and-coming company looking to sling-shot themselves to instant growth.

While VC funding can give an important vote of confidence and is absolutely necessary for large infrastructure projects, there’s another side to VC funding— it can actually become a huge hindrance. As I’ve discussed before, skipping venture capital can leave your company with the freedom to grow in a sustainable way, creating more value for all stakeholders.

This means when you do sell – as my company AdoTube did recently— you are able to reap all the rewards of selling a healthy profitable company while being a big part of its future. Read below for the 5 reasons why skipping the VC can leave you with more money and probably more importantly a better company legacy.

1. VCs just want their return

Venture capitalists have a portfolio of investments consisting of multiple start-ups, and therefore only care about average portfolio results. On the other hand, founders have all their eggs in one basket. Not only is this company their brainchild, but it is also their savings on the line. While founders are interested in the eventual payout, providing a product or service that consumers are excited about can be even more important. This focus on the long-term can lead to a greater eventual pay-out as well as a better company legacy.

2. It’s easy to waste VC money, diminishing overall value

It is easy to overspend when it is not your money. When a small company comes across millions of venture capital, a lot of that cash can get thrown out with the bath water. Keeping the company small and growing it with your own sweat, blood and hard earned cash can lead you to be thriftier in your decisions. When AdoTube started, we made sure every purchase would earn us back revenue, otherwise why waste the money? Ultimately, this allowed us more value for our investment and helped us get a better return.

3. VCs go big or go bust

Multiple rounds of VC can put founders in a situation where the company either becomes extremely successful or goes bust. Venture Capitalists’ are looking for the big payday, and if the instant pay-out is not immediately apparent, the company can come to a screeching halt. Founders, on the other hand, can take their time building the company up growing it organically. Without venture capitalists looking for their end return, there is still a lot of middle ground available to time a company’s growth spurt with the market.

4. VCs don’t care about company culture

VCs aren’t incentivized to make deals that are best for the company and the founders. They are incentivized to sell for the most money. The problem is that while every founder dreams of retiring to the Caribbean after they sell, the reality is that their role with the company is often far from over. Founders are often needed to stay on board to steer transitions or integrations are also often the best person to run the newly acquired company. Culture is paramount in making sure all of this happens smoothly and benefits everyone.

5. VCs don’t know what’s best for the company

Venture Capitalists don’t understand your business like you do. They study revenues and look for synergies with other companies. VCs can even value companies differently depending on how they might merge with another. Valuing a company based on this can take away from the goals of founders, forcing companies to work more like a widget factory than a company. A simple sale could also mean the instant death of your company, destroying all the value that you created (just talk with the guys at Foursquare). While the VCs walk away with a pay-day the company that you spent years creating is gone in an instant.

A London bakery recently experienced the worst-case scenario of offering a Groupon for a small business, and it cost the owner thousands (via NBC Chicago).

Need a Cake bakery owner Rachel Brown decided to put up a 75% discount on a dozen cupcakes on the site, which dropped the price down to $10 from $40.

Apparently, people really love getting cupcakes cheap, because she was rushed by throngs of customers in a cupcake frenzy. 8,500 people signed up, and her crew of eight had to make 102,000 cupcakes to meet the orders.

Brown lost $3 per batch because she had to hire 25 extra workers to help, and she ended up losing $20,000 because of it, which a ton for a small biz. It wiped out her profits for the year, reports the Daily Mail.

“Without doubt, it was my worst ever business decision,” she told the BBC. “We had thousands of orders pouring in that really we hadn’t expected to have. A much larger company would have difficulty coping.”

Well, it looks like most small businesses think so. An overwhelming majority of 70% hate Groupon, if the latest survey from iContact is to be believed.

As for Brown and her bakery, the experience may have cost her 20 grand, but what about all the exposure she’s getting for her store? Great, right? It doesn’t hurt, but it probably wasn’t worth the cost.

Small businesses like this bakery thrive on relationships with their local customers, not crowds of outsiders coming in to snatch up a free lunch.

Getting new customers is great, but in this case, the bakery rewarded the wrong customers. Those 8,500 people that rushed for the Groupon probably won’t be coming back to pay for the same cupcakes at quadruple the price.

Only those the store has nurtured relationships with for a long time (in Brown’s case, 25 years), should be the ones rewarded. They’re the ones that keep coming back for more.

Digital Content Today: Arbitron Posts Twitter Numbers

Media usage tracking company is reporting some surprising numbers on Twitter usage. According to a report in RadioInk, a webinar fromArbitron/Edison Research revealed that 87% of Americans are now aware of Twitter, up from 24% in 2009 and just 5% when the question was first asked, in 2008. But in looking at how many Americans are active users of Twitter — defined as using the service at least once a month — that figure came in at 7%, or about 17 million people, up from 2% in 2009.

Those are huge numbers to be sure, but less that what the blogosphere and assumed ubiquity of Twitter actually seems to be. Edison VP/Strategy & Marketing Tom Webster said awareness of Twitter has soared over a very short period. Webster compared Twitter usage to that of Facebook, the “10-ton gorilla” of social networking, with about six times as many users as Twitter although awareness of the services is roughly equal, and said, “Given that awareness per se is not a constraint, I think the smartest thing you can say about this particular graph is that Twitter has yet to articulate its value to mainstream Americans.”

Arbiron/Edson says that 18% of active Twitter users access the service several times a day and 15 % report they use it at least once a day, while 22% say they’re on Twitter at least once a month. But more than half — 53% — of active Twitter users don’t post tweets themselves and are instead, Webster said, “driven to go there as consumers of broadcast content.”

Other data:
• About 51 % of active Twitter users are white, 24% are African American — about twice the percentage of African Americans in the general population. The study speculated that African Americans may use Twitter more “conversationally” than other users.
• About 19% saying they’re “among the first” to buy or try new products, compared to 10 % of the population as a whole. 25% say they buy or try products before others, but not first.
• They’re also inclined to access the Internet from several locations, and 63% access social networking from a mobile phone, compared to 35 % of all social-network users. And for Twitter users, Webster said, SMS is “pretty much like oxygen”: 92% use SMS, and 73% text multiple times a day.
• About 42% of monthly Twitter users say they use the service to learn about products and services, and 41% use it to post their own opinions about products, while 31 % seek others’ opinions.

Active Twitter users report spending four hours a day online, compared to about two hours for the general population. But, Webster noted, “the other media here aren’t proportionately lower.” Twitterers spend two hours, 41 minutes a day with radio, compared to two hours, five minutes for the general population, and they spend three hours, 22 minutes with TV, compared to three hours, 25 minutes.

34% of respondents 18 and up said soft drink advertising was the most trustworthy,

22% said fast food advertisements rated most trustworthy

18% pharmaceutical companies

14% auto companies

13% financial services companies

If 1 in 3 or as low as 1 in 10 trust ads, even if they saw the ads, they are likely to ignore them or NOT base their purchase decisions on them. Imagine if you had spent a ton of money making the ad, and another ton of money to air or place the ad, how low the ROI would be, if any.

If you believe that lift in search volume indicates interest and intent and if you consider that each 30-second ad cost $3 million in 2009 (WSJ: NBC Super Bowl Ads to Cost $3 Million) and assuming GoDaddy’s ad did not air more than once, they spent $3 million to get their ad in front of a TON of people and to get people’s attention. Those people who saw the ad and were interested enough to take action went online and searched for more information by typing godaddy into search (see lift in search volume during February of each year) .

If we assume that it took $3 million to generate a certain lift in search we can use multiples to calculate the media dollar equivalent of any lift in search — for example, if godaddy spent $3 million to get X lift in search, then a 2X lift in search would have required $6 million of media (in a very very simplified back of the envelope estimate; it usually would cost more than 2x to get that lift) — i.e. it would have cost at least $6 million in superbowl ad media dollars to achieve a 2X lift in search volume.

So, if we now compare search volume on megan fox side by side with godaddy search volume, we will see that in Feb 2009 Megan Fox was indexing at 21 while godaddy was indexing at 12 (this is normalized to a scale of 0 – 100). So search volume on megan fox indicates she was getting the equivalent value to $6 million of super bowl media ad spend – FOR FREE — roughly 2X the search volume of godaddy in the same time period.

At the peak of her search volume in June 2009 (corresponding to the release of Transformers 2: The Revenge of the Fallen), she was indexing at 100 and godaddy at 7. This is 8x the index of godaddy of 12 during the Feb 2009 time period when they were airing their superbowl ads. This implies that she was getting the search volume that would have required the equivalent to a $24 million super bowl ad spend to achieve — again for FREE!

If you want to research futher, use the following link to bring up Google Insights for Search to see relative search volume

In February 2008, Megan Fox indexed at 8 and GoDaddy at 8. In 2008, Superbowl ad spots cost only $2.7 million — so she had the equivalent search volume as a paid advertising spending $2.7 million on a Superbowl ad.

In 2007, Godaddy indexed at 6 during Feb 2007 Superbowl. Megan Fox indexed at 43 during the July release of the first Transformers movie — this is an 8X multiple on Superbowl ads that cost $2.6 million — or $21 million

So the perfect “product placement” of Megan Fox in the two Transformers movies garnered her nearly $50 million worth of advertising based on search volume equivalency. This does not even take into account her sustained and increasing search volume, compared to most advertisers’ search volumes which drop right back down to pre-ad levels once the ad is finished airing.

Digital Consigliere

Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.